Can I get car finance with no credit history?

Your credit score will be checked if you apply for car finance, and if it’s not as shiny as you’d like - or you don’t have one at all - this could mean  you might struggle to be approved.

If you don’t have the money to buy a car upfront, or you’d prefer to spread the cost with a car finance agreement, one of the first (there’s a few) things to look at is your credit score.

As you are applying for a loan - through a lender or broker - you will need to go through the process of applying for credit. In some cases it is possible to get car finance without a credit history, but it’s not guaranteed and can be more difficult.

How can I check my credit history?

It’s free to check your credit score and you can do it at any of the three leading UK credit reference agencies:

• Experian
• Equifax
• Transunion

Each one has its own method for calculating a credit score, so the numbers will look slightly different depending on which agency you look at. 

While it’s free to see your score, you’ll have to pay a little extra to see a detailed view - or to sign up to a credit monitoring service whereby you’re given a range of extra perks including regular updates when your score changes.

Why don’t I have a credit score?

If you’ve never had a credit agreement before, you may not have a credit score. This is pretty normal, especially if you’re a little younger, as you may not have had a chance to regularly use credit cards or have needed to apply for loans, for example.

The downside is that your credit score will more than likely be low and this isn’t something lenders like to see in an applicant. However, it is possible to get off on the front foot and boost your credit score before applying, as we explain a little below. Alternatively you may be able to use a guarantor to help you get approved.

Why is credit history so important?

Your credit history is something that stays with you for life and is used whenever you make an application for credit. There’s no getting away from it, and whether you’re buying a house, a car, or applying for a phone contract, it’s going to play a part in whether you’re approved, what interest rate you pay, and how much you might be able to borrow.

Whatever state your credit score is in, it won’t stay that way forever either. You have the power to change it - and while this isn’t something that happens overnight, there are lots of things you can do to boost it over time.

What do lenders check when I apply?

Car finance providers like to do their research before lending a decent chunk of money to people. They’re looking at your credit score because they want to be confident that you are reliable and can afford to make your repayments. This helps them (after all they are lending you the money in the first place) but it’s also good for you, as you won’t end up with a loan you can’t pay back.

How can I get finance without a credit history?

If you don’t have a credit history, or it’s in poor health, it’s going to be harder for you to be successful when applying for car finance. While it won’t be impossible, if you are approved you can expect to pay a higher interest rate and be offered a lower maximum borrowing amount. 

If you have the option to wait, it may be better to put off buying that new car until you can improve your credit score.

How can I improve my credit score?

If you want to improve your credit score, and make yourself more attractive to a potential lender, you’ve come to the right place. Make a start with this list:

• Make sure you’ve joined the electoral roll, it’s free and used to verify your identity - plus it means you’re able to vote so it’s no brainer
• Always pay everything off on time, set up a diary alert if you think you will forget or ask you bank to arrange a direct debit payment to automatically go out
• Keep an eye on how much you’re spending, your credit score will take a hit if you’re using the majority of available credit to you
• Don’t make multiple applications for credit in a short space of time, this can look risky to a potential lender
• Regularly check your credit score and make sure everything on it is correct

Can I use a guarantor?

You may be able to use a guarantor to help improve your chances of being accepted. A guarantor is a trusted person, often a parent, who agrees to be a safety net and make the repayments if you can’t. 

Before you sign on the dotted line, make sure both you and the guarantor are aware of what will happen if you do have problems repaying. It’s a big responsibility for someone else to take on and they must be comfortable with it.